Greece's Socialists (PASOK) have become the latest party to attempt to form a coalition government after a left-wing bloc opposed to austerity measures gave up on its efforts to build a ruling majority.
Evangelos Venizelos, whose PASOK party finished third in Sunday's inconclusive parliamentary elections, received the mandate on Thursday to seek partners for a coalition government, after weekend elections produced a deadlocked result.
Venizelos, who received the mandate from Greek President Karolos Papoulias on Thursday, has a maximum of three days to seek a deal.
Alexis Tsipras, the leader of the leftist Syriza bloc, on Wednesday abandoned his efforts to form a coalition, after failing to reach an agreement with the mainstream parties because of his insistence on rejecting austerity measures demanded by the EU and IMF as part of a bailout deal.
PASOK, Greece's main party on the centre-left, and the centre-right New Democracy both support austerity measures intended to keep the country in the eurozone.
But the two parties failed to gain enough seats in Sunday's vote to renew their coalition, and New Democracy, which won 108 seats in the 300-member parliament, has already failed in its attempt to form a government.
Venizelos said he would continue negotiations, despite the lack of agreement in the past few days.
"It was clear that in the current stage of this process we cannot reach a solution but that we must continue this effort," he said.
"The vast majority of the country wishes to remain in the euro, an exit from the euro would result in mass poverty, a loss
of value of property, income and prospects. Greece would lose many decades," said Venizelos after talks with Tsipras.
Tsipras said that talks with other party leaders on Wednesday had failed.
"We cannot make true our dream of a left-wing government," he said. "Tomorrow, I shall hand back the mandate given to me by the president of the republic and we shall continue to take part in the constitutional processes."
New Democracy leader Antonis Samaras said it was impossible for him to agree to the demands laid down by Tsipras.
"I explained to Mr. Tsipras that the conditions he set do not lead to a renegotiating of the bailout policy, but to a unilateral denunciation of it and to the country's immediate bankruptcy," said Samaras.
"By repudiating the agreement, Mr. Tsipras is asking for something ... that will isolate Greece. He's not asking me to withdraw my signature. He's asking me to accept Greece's exit from the euro and the country's bankruptcy, I will not do that."
The political uncertainty has alarmed Greece's international creditors, who have insisted the country must stick to the cost-cutting terms of its bailout.
Athens has promised to pass new austerity measures worth $18.9bn next month and to implement other reforms.
These will be reviewed by its creditors, who will then determine whether to continue releasing rescue loans that are keeping Greece solvent.
If no solution can be found, the country's president will convene all leaders in a last-ditch attempt to cobble together a government.
If that fails, Greece will head to new elections in early June.
Both Germany and the EU have made clear they expect Athens to honour its commitments of the bailout
Guido Westerwelle, the German foreign minister, said on Wednesday: "Germany would like to keep Greece in the eurozone, but Greece's fate is now in its own hands."
However eurozone governments agreed to give Greece another instalment of $6.7bn to allow it to meet its immediate financial obligations on Wednesday.
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